Our global society is in crisis, and the core of the crisis seems to be about resources: resource limits, overuse and misuse of resources, resource-related conflicts, and the resulting destruction of our natural life-support systems. The crisis is at an extreme stage, as we are approaching the final hard limits of a finite earth. This is all the more frightening because our governments seem powerless to respond effectively to the crisis. We can all see the rocks ahead, and yet the crew steams straight on, as the ship-of-state carries us toward destruction.

Some people saw the crisis coming years ago. A worldwide environmental movement has been active since at least 1962, after Rachael Carson’s The Silent Spring was published to wide acclaim. This movement has focused on lobbying for environmental protections, and for stronger regulation of corporations. The movement has had a number of successes, as when the Environmental Protection Agency was first established in the USA. But over time the movement has become less effective, the regulatory agencies have been corrupted by corporate influence, and the dark clouds of crisis loom ever larger.

But hark! At this darkest time, promising new initiatives are emerging. While the environmental movement may have faltered, environmental consciousness has spread throughout the society. And in the face of government ineffectiveness, activists are turning their attention toward grassroots solutions to the crisis.

From the early days of the environmental movement, we have had the notion of ‘think globally and act locally’. This translated mostly into individual life-style choices, such as driving and consuming less, recycling and bicycling, installing double-glazed windows, etc. The new wave of activists are interpreting ‘act locally’ in a more empowered way: they are working to mobilize whole communities around the goal of achieving sustainability at the local level.

This new wave of environmentalism is non-confrontational and more or less apolitical, unlike the feisty old wave, and yet the new wave represents a much more radical response to the resource crisis. These activists realize that environmental regulations are simply not enough, even if they could be achieved. A total transformation is needed in the way we use resources and in the way we run our economies. If every community could go through a transition process, and achieve sustainability locally, then the whole society would be transformed.

The total economic transformation of our societies is a very radical agenda indeed. If we look back in history for movements with equally radical agendas, we find only violent revolutionary movements, and mass political movements. Our new wave of environmental activists are not at all radically minded, in that traditional political sense, and yet they find themselves on a very radical path, a path toward social transformation. How do we account for this novel emergence of politically innocent, and yet potentially effective, radicalism?

I suggest that this new kind of radicalism comes from a fundamental shift in consciousness on the part of leading-edge activists. That shift is not toward radicalism itself, rather it is a shift from ‘asking government to solve our problems’, to ‘figuring out what we can do for ourselves’. Activists were drawn toward this new consciousness, as it became increasingly clear that governments were simply not facing up to the crisis, and that no amount of political activism was going to wake them up.

As long as activist energy is directed towards influencing governments, only small things will be asked for. In order for initiatives to have any hope of success, they must be framed within the context of overall government policy, and they must not be making ‘unrealistic demands’. Thus stifled in their options, the very imagination of activists ends up being constrained to incremental hopes and proposals.

But once activists turn their attention to grassroots solutions, their imagination, their visions, and their creativity are unleashed. Instead of limiting their thinking to ‘achievable reforms’, they begin to ask, ‘How can the problem actually be solved?’ Once that bold question is asked, sensible people can often find answers, even if governments can’t.

The community is the natural place to pursue grassroots initiatives, and the techniques of sustainability have been pioneered by intentional communities, ecovillages, permaculture farms, etc. This new wave of environmental localism is simply bringing the available tools to bear in a place where they can make a real difference in mainstream society. While governments aren’t listening, communities might be persuaded to pay attention — to ideas that can benefit them. This seems to be a quite sensible strategy for moving toward sustainability, one community at a time.

It is not only environmentalists who have turned their attention to the local, as a focus for effective activism. The crisis is multi-faceted, extending to economic collapse, unemployment, homelessness, etc. And in every such area of crisis, governments show the same inability to respond effectively.

Activists who have ideas for creating employment, or responding to some other area of crisis, are increasingly seeing the community as the best place to apply their ideas and their energies. As these energies converge on the community, we are beginning to see the emergence of a generalized localization movement.

Around the world, there is a growing movement to pull back from the relentless march of corporate globalisation by re-rooting economic and social activities at the community level. From the burgeoning popularity of farmers’ markets and food co-ops to the revitalisation of community banking, people are organising themselves to reclaim the economy from large profit-driven corporations and instead build sustainable, local alternatives.
— Anna White, “Why Local Economies Matter”

Anna White talks about a ‘growing movement’, but unfortunately the growth is horizontal rather than vertical. More and more activists are getting involved, in a growing number of communities and a variety of initiatives, but in each community the actual benefit of the initiatives has remained marginal.

There might be a weekly farmer’s market, for example, and it might be crowded with happy farmers and happy customers. But in terms of the overall food business in the community, the farmer’s market usually handles only a negligible percentage. The early adopters get on board, for some percentage of their food purchases, and the program never grows much beyond that.

Localization activists are motivated by a vision of transformation, and their initiatives do have transformational potential. However none of these initiatives, apart from a few notable exceptions, has found a way to escape from marginalism and really begin to have a significant effect on any community’s economy, or to move any community significantly closer to sustainability.

Let us now take a closer look at the various initiatives, in order to understand the nature of the obstacles preventing greater progress. In the next chapter, we will then take on the challenge of figuring out how these obstacles might be overcome.

Reviewing the threads of localism

The various localization initiatives can be categorized under three primary threads of activity:

These initiatives are oriented around making the most of local resources, reducing consumption of resources generally, and seeking to minimize dependence on goods and services sourced from outside the surrounding region. To the extent these efforts succeed, the community could be shielded from disruption by global resource scarcities, or by a collapse in society’s supply chains.

Among the specific initiatives are campaigns to encourage certain individual lifestyle choices, such as buying from local shops, riding bicycles, installing better insulation, and all those other things that environmentally-minded people have been doing for quite some time, on the basis of the principle, ‘think globally and act locally’.

The new-wave activists have extended the initiatives to group undertakings, such as urban gardens, farmer’s markets, local energy production, and local currencies to encourage local shopping.

As regards the lifestyle-choice initiatives, the obstacle to greater progress is clear. The immediate benefits to the individual from making such choices are marginal, there are costs and sacrifices involved, and only a limited number of people are sufficiently motivated by long-term concerns to join in.

In the case of the group undertakings, there are two different obstacles preventing the initiatives from having a more significant impact on the local economy. In some cases, as with Farmer’s markets, the obstacle is the same as above: not enough immediate benefits to attract widespread participation.

In other cases, we see a different kind of obstacle. In these cases activists have found a way to generate widespread participation. But in doing so they have narrowed the scope of their initiatives to the point where even widespread participation has only a marginal impact on the local economy. Examples of this are Berkshares and the Transition Towns movement.

Berkshares are a community currency that has been introduced into the Berkshire region of Massachusetts. Local residents can purchase Berkshares at a discount, 100 Berkshares for $95. They can then spend those Berkshares as if they were dollars, at merchants who have chosen to participate. Such a merchant can trade in 100 Berkshares and get back $95. The net effect is that merchants are offering a 5% discount to local residents, in order to increase their business volume, and in order to encourage a community spirit of ‘shop locally’.

This is an attractive enough proposition that many local businesses and residents are participating. This has succeeded in increasing the percentage of local shopping, and the local residents are benefitting from the 5% discount. Those are certainly good outcomes, but in terms of moving toward local self-sufficiency or sustainability, the net result is marginal.

The Transition Towns movement is focused specifically on the need to reduce energy consumption, based on the belief that oil is getting scarce and that society’s supply chains are going to break down. The movement has a step-by-step plan for communities, based on educating the people in the community about the need to reduce energy usage, working with local authorities, and developing a multi-year Energy Descent Action Plan, with the overall support of the community.

The town of Totnes, in the UK, seems to be the most advanced of the Transition Towns, having launched their project in 2006. They have an Energy Descent Action Plan, with 39 projects on the go, and the activity has generated more than £8,000 income for the community. They also have a local currency, the ‘Totnes Pound’, and out of a population of less than 8,000, over 3,000 have signed up as supporters of the project.

These are impressive achievements in terms of community organizing, and yet, with all that local support and activity, and four years of effort, the income generated has amounted to only about £1 per resident. And the Action Plan, at this point, is actually just a plan to create a plan, which in turn will hopefully outline a path to becoming somewhat more sustainable by the year 2030.

This has been an admirable effort by the activists and the community, and in many ways the project is an ongoing success story. But again, in terms of moving toward local self-sufficiency or sustainability, the net result is marginal.

• Revitalizing the local economy

These initiatives are oriented around stimulating the local economy, putting people to work, and seeking to create local prosperity — while minimizing dependence on the outside economy or outside investment. These objectives are complementary to the self-sufficiency objectives above, but the emphasis is on stimulating economic activity, rather than on reducing imports to the community.

The primary revitalization initiatives have to do with local currencies, local funding entities, and co-ops.

Local currencies

In the previous section, local currencies were seen as a way to encourage buying from local businesses. Here we are emphasizing something else: the ability of local currencies to enable a greater level of local economic activity, than can be supported by the locally available dollars.

Note: for simplicity, I’m using the term ‘dollars’ for the local official currency, but of course this might really be Euros, Pounds, or whatever, depending on where the community is located.

In discount-based local currencies, such as Berkshares, some degree of increased economic activity can be generated, but that is limited to a small percentage increase over what could be supported by available dollars. In order to move beyond that, another kind of local currency is needed, a complementary currency, such as Ithaca Hours, Time Dollars, or LETS.

Complementary currencies are separate currencies in their own right. Units are not purchased for dollars, but are issued on some other basis. And units are not exchangeable for dollars; their value is defined only by the goods and services that can be accessed with them. Complementary currencies have the potential to support a vibrant local economy, even in a dollar-impoverished community.

Discount-based currencies and complementary currencies each appeal to different constituencies, and for different kinds of transactions. As we saw with Berkshares, discount-based currencies are appealing to established merchants, as a way of increasing their business volume. However established merchants are not likely to be interested in accepting complementary currencies, because they are unlikely to be able to buy their supplies of goods using such a currency.

Complementary currencies are appealing to ordinary people, as a way to exchange goods and services among one another. Someone might earn units by giving haircuts, and then use those units to buy bread from someone who bakes. For these kinds of transactions, a discount-based currency offers no benefits over using dollars directly.

The reason discount-based currencies have only a marginal effect on the local economy — despite widespread participation — is that discounts are inherently limited as regards the the benefits they can provide. In the case of complementary currencies, the benefits have been marginal because not enough people have participated thus far, and the transactions involved have tended to be of marginal value.

Local funding entities

A local funding entity could be a local bank, a local credit union, or some kind of local entity that is able to invest in local projects and enterprises. In order to serve the purpose of revitalizing the local economy, the funding entity needs to have a certain ethic about its operations. In particular, the entity needs to be dedicated to revitalizing the local economy, rather than dedicated to maximizing its own return on investment.

Credit unions are very beneficial to communities. They are owned by their members, and their mission is to serve their members rather than maximize their profits. They tend to offer better terms on both loans and savings accounts than banks do. And since credit unions don’t make speculative investments, they survived the recent financial collapse relatively unscathed.

Banks, if they are established on an appropriate basis, can also be very beneficial to their communities. If we consider the state of North Dakota to be a ‘community’, then the Bank of North Dakota demonstrates the ability of a bank to insulate its community from external financial problems.

This bank is owned by the state of North Dakota, rather than by private investors, and it is dedicated to promoting the economic welfare of its citizens and businesses, rather than maximizing profits. As with credit unions, this bank came through the financial collapse in very good shape: How the Nation’s Only State-Owned Bank Became the Envy of Wall Street.

The bank not only provides funding, but it helps people with entrepreneurial ideas to develop a business plan, and to set up a sound management team. The bank then stays in touch with the enterprise, providing counseling, and making additional funding available, when that makes good business sense. The bank acts as a friendly partner and mentor in such enterprises, and the economic success of the Mondragon system has been remarkable.

The Grameen Bank demonstrates another way that local communities can benefit, using the mechanism of microcredit. Grameen makes small loans to people in poverty, creating self-employment for income-generating activities and housing for the poor. Prof. Muhammad Yunus, founder of the Bangladesh-based Grameen Bank, received the 2006 Nobel Peace Prize for his work. Grameen has shown that people are not poor due to a lack of talent or enterprise, but because of a lack of opportunities.

One of the most promising proposals for a local funding entity is the Common Good Bank. This bank has been designed from the very beginning as a vehicle to support democratically-managed community development. The plan is to have local divisions of the bank in participating communities, and in each community the depositors would decide what the bank should invest in. Bank profits are to go to schools and suitable non-profit organizations, and some loans will be micro-loans, as with the Grameen Bank.

The most remarkable element of this banking scheme is a very special kind of local currency, called Local Money. This is a kind of complementary currency, in that it can be issued for free, but it has the virtues of a discount currency, as it can be exchanged for dollars — and there isn’t even a discount. Such a currency would be appealing to everyone in the community, including the local merchants.

Local Money is an extension of the principle of fractional reserve banking. All banks, under this principle, can issue loans in excess of their actual reserves, on the theory that most loans get repaid, and the bank won’t be caught short. In essence, money is created when a loan is issued, and the bank profits from the interest on this newly created money. It’s a very profitable scam for the banks. Local Money transforms that scam into something beneficial to communities.

Units of Local Money can be issued as loans, or as grants to community projects, or as part of the remuneration for bank workers. These units can then be used to buy things from local merchants, or exchanged for services. The value of a Local Money unit is based on the stable, inflation-free value of some basic local commodities, benchmarked regularly against the dollar. The bank will accept units and exchange them for dollars, based on the current valuation.

Needless to say, the stability of this scheme depends on fiscal prudence in the issuing of Local Money. Just as with national currencies, careful control of the local money supply is called for. The money supply must be kept in balance with the volume of trading taking place in the community. If the money supply is too great, inflation results; if the money supply is too small, the operation of the local economy is unnecessarily restrained. In addition, the amount of Local Money in circulation must be kept in balance with the bank’s dollar reserves, because of the convertibility guarantee.

Provided that Local Money is prudently managed, the scheme has great potential for stimulating development and prosperity in the community. Wherever there are untapped talents, or undeveloped economic potential, Local Money can be made available to put that talent to work and realize that economic potential.

We might recall here that, according to Benjamin Franklin, the main reason for the Revolutionary War was the fact that Britain outlawed the issuance of local currency by the Colonies. Local currencies had enabled prosperity in the Colonies, and the Bank of England was not benefitting. It’s not nice to mess with central bankers.

There is one pitfall for the Common Good Bank’s scheme. If severe inflation occurs in the dollar economy, the convertibility guarantee cannot be maintained. If the value of the official currency plummets, and Local Money retains its value, the bank wouldn’t have sufficient reserves to handle exchanges, particularly if people panicked and started a dollar-exchange run on the bank.

If such inflation did happen, it would be a good idea for the bank to sponsor a public viewing of Jimmy Stewart’s, It’s a Good Life.

I say that only partly in jest. The fact is that in a period of severe dollar inflation, assuming that Local Money has been in use for a reasonable length of time, local people would be happy they have a currency that is working for them. They would have every reason to continue to honor it, and little incentive to exchange for a national currency that is in trouble. They would be likely to accept a change of policy, where exchanges for dollars would be limited based on need, and on the dollar reserves available to the bank.

To sum up this section on local funding entities, we can see that the effect of such entities has gone far beyond the marginal in many cases. With Mondragon, the Grameen Bank, and the Bank of North Dakota, we have seen that a well-managed and well-conceived local funding mechanism can provide very significant benefits to its ‘community’.

In the Common Good Bank’s scheme, we see a very well thought out synthesis, bringing together proven elements into a package designed specifically for facilitating community empowerment. With their Local Money, they have combined the virtues of a complementary currency with the powerful monetary model that is routinely abused by central banks, but that can also be a potent enabler of community prosperity, if used wisely.

The Common Good Bank provides a good model of local finance, but there are drawbacks to the centralization aspect of the model, where each community operation is established as a branch of the central Common Good Bank.

Clearly this offers convenience and simplicity to the community, in setting up a local system, but it inhibits local innovation, and it makes the whole scheme highly vulnerable to co-option or disruption at that one central point. Community empowerment would be better served by adapting the model to local circumstances, and implementing it locally, perhaps in a more lightweight form than an officially registered bank.

Co-ops

There are several kinds of co-ops, including worker-owned co-ops, consumer-owned co-ops, and co-ops whose members are other enterprises, such as a marketing co-op for local farmers. Co-ops provide both economic and cultural benefits to the community, and to co-op members.

Culturally, co-ops bring local people into a collaborative relationship, and they give them experience in managing their own ‘community affairs’, within the microcosm of the co-op. In these ways co-ops help build a sense of community, and a sense of empowerment, among community residents.

The initial funding for co-ops typically comes at least in part from the members themselves, which minimizes start-up indebtedness, and motivates the owner-members to make a success of the venture. And without non-participating investors, a co-op has the flexibility to operate on a break-even basis if that best serves the interests of the members and the nature of the co-op. In these ways, the co-op form is complementary to the goals of local self-sufficiency and community empowerment.

Consumer co-ops are a means of leveraging buying power, getting goods at wholesale prices, being able to control the quality of the goods, and being able to choose the suppliers. When people shop at a local co-op, wealth isn’t being drained from the community, as it is when they shop at corporate outlets. And the co-op can give preference to local suppliers. Unfortunately, while cheap foreign imports are still so readily available through corporate outlets, consumer co-ops can have a hard time competing in the local marketplace.

Co-ops whose members are enterprises can be leveraging either buying power or marketing budgets, depending on which side of the supply chain the co-op is operating on. These kinds of co-ops can be of considerable benefit to small local businesses, increasing their competitiveness by reducing their costs, while at the same time providing them with broader access to suppliers and markets.

Local worker-owned co-ops can be very beneficial to both the workers and the community, particularly if the members were formerly unemployed or under-employed. In these cases, the worker benefits significantly, and the community economy also gains from the productive contribution of formerly wasted local talent. Local talent is a local resource, and as with all local resources, if it can become more productive, that contributes to both community prosperity and community self-sufficiency.

Mondragon provides not only a successful model of local funding, but also a very successful and highly evolved model for worker co-ops, as described in the documentary video referenced above. They have developed a set of guidelines, and organizational mechanisms, that make for a very healthy enterprise.

Under their system, the management team is empowered to do its job on a day-to-day basis, while at the same time the owner-workers are effectively represented at every level of the organization, ensuring that the co-op is managed in the best interests of all concerned. Ongoing communication across the levels of the organization is maintained, by means of various councils.

A participatory spirit of ‘being on the same team’ is very important to the sound functioning of a worker-owned co-op, and at Mondragon they have learned that this spirit becomes difficult to maintain if a co-op grows too large. Rather than adding a new division to an existing co-op, for example, it often makes more sense to spin off a new autonomous co-op.

In the various localization initiatives we have looked at so far, the community itself has been a more or less passive participant in the process. The activists provide the energy, the programs are largely pre-defined, and the folks in the community need only decide whether or not to participate.

Those initiatives have been about teaching things to the community, and advising local people about what they should be doing as a community. There is another thread of initiatives that are about listening to the community, and helping the local people to find out what they want to be doing as a community.

Rather than programs, these initiatives involve various dialog processes that are aimed at creating an environment where dialog can be more productive and creative than typically occurs in discussions or meetings.

There are a wide variety of dialog processes, appropriate to different situations, with varying degrees of effectiveness, and with varying degrees of overhead involved. A comprehensive catalog of community-oriented dialog processes can be found in the Co-Intelligence Institute’s toolbox of processes for community work.

As this book continues, we will be looking at various of these initiatives and processes, as we are considering situations where each might be relevant. For now I’d like to introduce one particular initiative that has achieved remarkable results, as regards:

finding common ground
generating sensible proposals
awakening the energy of the participants

A case study: Wise Democracy Victoria

One very promising dialog initiative has been unfolding over the past few years in the city of Victoria, British Columbia. A group of local citizens came together under the name Wise Democracy Victoria, and they have convened a series of Wisdom Councils in which local residents have participated.

Wisdom Councils were invented by Jim Rough, of Port Townsend, Washington, based on practices that evolved out of his consulting work in industry. The participants in a Wisdom Council are selected randomly from the local population, much like jury members are selected. The Council then convenes for one or more days, using a process Jim developed, called Dynamic Facilitation.

In this process, the facilitator’s job is to give their full attention to whoever is speaking, and encourage the person to fully express what’s on their mind. The facilitator repeats back the main statements, and writes them down on a flip chart, so that everything said is clearly understood by everyone.

The facilitator makes no attempt to push the group toward reaching conclusions, but just helps the group follow its own energy. In a Wisdom Council there isn’t even a topic for discussion: the participants themselves gradually converge on what they want to talk about.

Wise Democracy Victoria has posted detailed descriptions of their series of three Wisdom Councils on this website: http://wisedemocracyvictoria.wetpaint.com/. Included are videos, newspaper reoprts, reference information, and statements that were created by each of the three Councils. The website offers this summary:
Wisdom Councils precipitate energy, enthusiasm and HOPE for the Future:

Past participants have indicated that the experience was transforming and energizing because they felt that their voices could actually make a difference!
Like a match in a haystack, the ‘latent energy of democracy’ is there, ready to be tapped. It only takes a few people at the right time and the right place. You can help provide the spark!
Three Wisdom Councils have now been successfully convened in Victoria, including the first in Canada and one in the close-knit neighbourhood of Fernwood. In each case the Council members have prepared an amazing statement of community spirit!
Even though the council members did not know one another prior to meeting and came from a wide diversity of backgrounds and experiences, in each case they have prepared a powerful, unanimous statement.

If you look at some of the videos and statements you will see that this summary does not exaggerate the remarkable outcomes of the Councils. There is indeed a ‘latent energy of democracy’ that can be woken up when people know that their voices can really make a difference, and they are in an environment where they are encouraged to express themselves.

Following each of the Councils, a public meeting was held where the Council participants reported on their experience and their unanimous statement. From the videos of these reports we can see that the participants didn’t just ‘agree on a statement’, rather they are all very enthusiastic about the ideas they have created together. Their enthusiasm spills over to the folks at the public meeting, and for one promising evening, following each Council, the latent energy of democracy comes alive in the room.

Unfortunately, these promising evenings are always followed by a let-down. Experiencing the possibility of participatory democracy is energizing, but there’s nowhere to go with that energy. When the event is over it’s like when an enchanting movie is over; you go back into the real world, with just a memory of an appealing world that you wish could be real.

Every attempt was made in Victoria to get the community interested in the Councils, first in Victoria as a whole, and later in the neighborhood of Fernwood. There were announcements and public meetings of various kinds, both before and after the events, and there was some good newspaper coverage. The hope was to generate public enthusiasm around the potential of ‘wise dialog’ in giving people a greater voice in public affairs. Again, a let-down, as the public response was relatively insignificant.

Wisdom Councils are a very important proof-of-concept, despite the fact that they have not yet escaped from marginality in their effect on communities. They have demonstrated that people in communities are capable of finding common ground and collaborating effectively, if they are in an appropriately supportive environment. These Councils have demonstrated in microcosm that people have a natural energy for participatory democracy, that there is indeed a ‘latent energy of democracy’ embedded in human nature.

How that energy might be awoken in a whole community, and how direct democracy might operate effectively on the community level, are still unanswered questions. Those questions are in fact a central theme of this book, and we’ll be returning to them in the next chapter and beyond.

Meanwhile, the Wise Democracy Victoria folks have managed to get the local government interested in the potential of wise dialog. The City of Victoria recently sponsored two Citizen Insight Councils, which are like Wisdom Councils, except they have a predefined topic to explore. This is happening as part of the city’s public engagement strategy, as they are reviewing the city’s Official Community Plan.

With city sponsorship, these Councils got a lot more attention than the Wisdom Councils did, and they may have a beneficial impact on city planning as well. The recommendations that emerged from the Councils are very sensible and creative.

This path, of using wise dialog in the context of public engagement with government, is in many ways a very good thing. It gives Councils an opportunity to have greater impact on communities than was happening otherwise; it raises public awareness about dialog processes, and it is a very effective way of providing public input to local government that is of high-quality and that has a considerable claim to democratic legitimacy.

That path, however, takes dialog away from the core direction of the localization movement, which is about transforming our societies beyond what governments are able or willing to pursue. To the extent dialog processes are devoted to advising government, only ‘realistic’ proposals can be entertained. And the proposals are recommendations only.